[ET Net News Agency, 29 August 2025] US economic data exceeded expectations, supporting
gains in US equities, with both the Dow and S&P 500 closing at record highs. The HSI
opened nearly 100 points higher and extended gains in early trade, rising by as much as
279 points to a high of 25,277. However, the index met resistance at higher levels and
narrowed its advance before the midday break. The HSI closed the half-day at 25,156, up
158 points or 0.6 per cent, with main board turnover close to HKD 184.1 billion. The Hang
Seng China Enterprises Index finished at 8,977, up 60 points or 0.7 per cent. The Hang
Seng Tech Index closed at 5,675, up 31 points or 0.6 per cent.

"Jaseper Tsang: HSI trend depends on US market performance and Mainland China consumption
data"

The HSI reclaimed the 25,000 level at the open and moved higher but was capped by
resistance at the 10-day moving average (around 25,262). Jaseper Tsang, Vice Chairman of
the Hong Kong Institute of Financial Analysts and Professional Commentators, told ET Net
News Agency that the HSI is likely to fluctuate between 24,800 and 26,000 in the short
term. As long as it holds near the 50-day moving average (around 24,800), the choppy
upward trend seen since early April can be maintained. He pointed out that investors
should focus on two main factors: the performance of the three major US indices, and the
upcoming consumption data from Mainland China. If neither of these factors deteriorates
significantly, Hong Kong stocks are likely to continue range trading, with individual
stocks likely to outperform the broader market.
In addition, southbound funds recorded a net sell of HKD 20.441 billion in Hong Kong
shares yesterday, marking the largest single-day net outflow on record. Analysts believe
this may reflect funds rotating back into A-shares. Tsang said that A-shares have shown
strong performance recently, so short-term fund reallocation is a normal market movement
and investors need not worry about a major shift in capital flows. He added that although
HIBOR has continued to rise recently, this is largely driven by carry trades rather than
shifts in core market liquidity. Furthermore, with Hong Kong IPO activity currently brisk,
some capital remains attracted to the market.

"SMIC's second half outlook remains positive, but significant growth is unlikely"

SMIC (00981) announced interim net profit of USD 321 million for the period ending 30
Jun 2025, up 35.6 per cent year-on-year. Basic earnings per share were USD 0.04, up 33.33
per cent. No interim dividend was declared. Revenue for the period was USD 4.456 billion,
up 22 per cent, while gross profit was USD 956 million, up 89.3 per cent.
SMIC management indicated that, in the first half of 2025, amid changes in domestic and
international policy, channels have been accelerating restocking, and the company has been
actively cooperating with clients to ensure deliveries. This situation is expected to
continue through the third quarter. Management also stated that, barring major external
changes, the company's goal for the full year is to outperform the industry average.
Tsang said SMIC's results were in line with market expectations. The post-results share
price decline was mainly due to funds positioning ahead of the announcement and taking
profits once the positive news was priced in. He noted that Mainland China is encouraging
domestic companies to use locally produced chips, with the government strongly supporting
chip localisation and rapid development in artificial intelligence, all of which are
boosting chip demand. Therefore, he remains optimistic about SMIC's future business scale
and earnings growth, believing these factors will continue to support an upward trend once
profit-taking pressure is absorbed.
However, he also cautioned that both the efficiency of current capacity utilisation and
the pace of new capacity expansion will take time to materialise, making it difficult for
SMIC to achieve rapid earnings growth in the short term. Even though the outlook for the
third and fourth quarters is generally positive, significant profit growth is unlikely in
the near term.
For investors not currently holding the stock, Tsang suggested that as SMIC has already
registered substantial gains and the forward price-to-earnings ratio has reached 78 times,
the valuation is relatively high. He recommends a more cautious approach, waiting for the
share price to pull back to around HKD 54 before considering phased entry, with a target
price of HKD 70.